September 25, 2012

Canadian Retail Sales Are Robust; Target, Nordstrom and Other American Retailers Move North

I have always had a fascination with Canada. I was, as a child, undoubtedly the only 12 year old in Virginia who followed Canadian
football and politics. In adulthood, there were two outcomes from this fascination:

I
wore, for a short time, a Winnipeg Blue Bombers hat. It was, ironically, stolen from me on “HatNight” at Madison Square Garden. The lesson
from this being that you should never take off your Blue Bombers hat at a
Rangers game. In fact, you should probably never take off any kind of hat.

I
have, with some success, tried over the course of my career, to make inroads
into the Canadian toy market.

Canada, for those Americans who try, is not a
particularly easy place to find success.
That was why a New York Times
article entitled “American Retailers Face Challenges in Expanding to Canada’ caught my eye. The authors, Ian Austen
and Stephanie Clifford, summed it up this way:
“American
retailers extending their reach northward seems like the most obvious of moves.
But until recently, the Canadian market was hard to crack for many companies. The Canadian dollar was weak, costs were higher,
and with limited real estate development, it was difficult to find space.”

That seems
to be changing, however, as the Canadian
economy continues to be comparatively robust and their dollar is strong. “Canada’s allure is basic: Sales per square foot
at Canadian malls were almost
50 percent higher
in 2011 than sales per square foot at American malls, according to Colliers International Consulting, a
real estate research firm.”

As a result, a number of American companies
are making the move north, Target and Nordstrom to

name two, joining pioneers like
Sears, Costco and Wal-Mart. Even though things are better, however, it’s wise to learn
from those who have gone before. For example:

·
Canadians
consumers are very aware of the price of things in the US. That is why J. Crew had to back
off of higher prices in Canada after getting a slew of complaints from Canadian
shoppers.”

·
Canadians, not surprisingly, have different tastes than Americans. According to the article, Wal-Mart
had to change its product selection to the extent that it now only carries 20%
of the SKU's it markets in the US (snowsuits sell well in July).

·
There are also those laws requiring
French and English as well as tougher labor laws.

·
And let’s not forget that there
are some great, home-grown retailers up north:
Canadian Tire and Hudson’s Bay to name two.

Are you selling in Canada? Let us know what your experience has
been.

Also, Canadian readers, how do you feel about
American companies coming north?